Rini v Attorney General [1995] SBHC 78; HC-CC 247 of 1994 (5 May 1995)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 247 of 1994

SNYDER RINI

v.

1. ATTORNEY GENERAL
2. MILIKADA SILAS

(Palmer J)

Hearing: 1/5/95
Judgment: 5/5/95

T. Kama for Plaintiff
C. Ashley for First Defendant
A. Radclyffe for Second Defendant

PALMER J: By Order dated the 29th of September, 1994, the original Order of the 14th September, 1994 was varied to permit the Second Defendant, his servants and agents to remove logs already felled from Porepore Island and export them. Paragraph (3) of that Order required the parties to file an agreed schedule of head of expenses. There is a list of heads of expenses in the court file but it is not clear if that had been agreed to or not.

Paragraph (4) provided for the payment of reasonable expenses incurred in the felling, extracting, transporting and exporting of the said logs, with the approval of this Court.

The Order also permitted the Logging Contractor owned by Abraham Eke, to carry out the necessary operation for the export of those felled logs.

The Second Defendant now applies by summons filed on the 12th April, 1995, for approval of reasonable expenses to be paid pursuant to paragraph (4) of the Order dated the 29th of September, 1994.

The affidavit in support of Milikada Silas filed on the 12th of April, 1995 sets out in more detail the Second Defendant’s claim for payment of reasonable expenses.

At paragraph 2 of the said affidavit of Milikada Silas, the total proceeds of sale received was $2,828,854.87.

At paragraph 3 of his affidavit, Milikada Silas seeks approval for the payment of the following expenses:

(i) Stevedoring $16,500

(ii) Tug boat $42,240

(iii) Royalties/Compensation $76,000

(iv) Fuel and oil $31,218

(v) Wages/Ration (6 Securities

- 7 months) $29,000

(see Exhibit "B" annexed to the said affidavit of Milikada Silas).

The expenses for stevedoring, tugboat, and fuel and oil unfortunately, appear to be closely linked to the obligations of A.E. Enterprises Limited as set out in the Logging Agreement dated the 29th of July, 1994, between that company and Ofogia Association Limited, (see Exhibit "C" attached to the affidavit of Silas Milikada filed on the 12 April, 1994).

Under that Agreement, four heads of expenses were listed, at page 3 of that Agreement under the sub-heading "CONSIDERATION". These were:-

(a) marketing fees;

(b) management fees;

(c) equipment hire;

(d) expenses.

The Agreement also provided that these heads of expenses were to be paid for at the rate of "USD75.00 per cubic metre (sic) of round log skidded to the log pond".

It is not clear whether the stevedoring, tugboat and fuel and oil charges should be treated separately from the rate of payment due to A.E. Enterprises Limited of USD75 per cubic metre.

Under the said Logging Agreement, those responsibilities seem to fall within the obligations of A.E. Enterprises Limited as spelled out at page (1) of the Agreement. What is not clear is whether those expenses are to be refunded in turn by Ofogia Association Limited to A.E. Enterprises Limited from the sale proceeds of the logs or whether they would be covered in the rate agreed to, of USD75 per cubic metre.

If the former, then receipts should be provided from A.E. Enterprises Limited and payment would have been made directly to that company, not the second Defendant or Ofogia Association Limited. If the latter, then it would be catered for in the claim of A.E. Enterprises Limited for $2,627,084.77.

It is my view that it has not been satisfactorily shown that these expenses should be released at this stage and accordingly approval is denied.

As to the expenses for Wages/Ration (6 securities - 7 months) at $29,000.00, there is a clause at page 2 of the Agreement under the sub-heading "OBLIGATIONS OF OFOGIA ASSOCIATION LIMITED" at paragraph (5), that the Association would be responsible for security at all times of all the machinery of A.E. Enterprises Limited. Unfortunately, the details provided is not totally satisfactory. Who were those six securities for whom that expense was incurred and when did that 7 months period commence and end? Are there any receipts or acknowledgments of payments, that can be shown to prove that those six securities did actually receive about $4,833.00 each during those 7 months? Approval too is denied for this claim at this stage.

At annexure marked Exhibit "A" in the same affidavit of Milikada Silas, he sets out a long list as to whom royalties/compensation are due, totalling up to $76,000.00. Unfortunately, there is no satisfactory evidence submitted to substantiate the release of that expense. For instance, there is no timber rights agreement executed between the customary land owners and Ofogia Company Limited. I take note of paragraph 4(c) of the Statement of Defence filed on the 16th December, 1994 and the explanation provided therein, but the very uncertainty which a timber rights agreement would have addressed now exists before this Court; who are the landowners and the persons lawfully entitled to grant the timber rights so that A.E. Enterprises Limited can fell, remove and export those logs at Porepore Island. Apart from the certificate signed by the Second Defendant himself, there is no other evidence to support the payment of royalties/compensation to those persons as the correct landowners. One of the main issues raised in the Statement of Claim filed in this action on the 14th of September, 1994, raises the usual question of customary ownership over Porepore Island. At paragraph (2) of the Statement of Claim, the Plaintiff concedes that the Second Defendant is a member of Repi Tribe of Marovo, which is one of the landholding groups which own Porepore Island. However, at paragraph (1) of his affidavit, he pointed out that there is also another tribe, known as the Bili Tribe, which is also a landholding group on Porepore. There would appear therefore to be two landholding groups that claim ownership rights or some sort of interest over Porepore Island.

The Plaintiff also claims to be a representative of both tribes. In the affidavit of Snyder Rini filed on the 14th of September, 1994, at paragraph (5), he states:

"Members of the Bili and Repi Tribes were never consulted on the grant of timber rights. I believe the Second Defendant had never obtained a consent of the Commissioner of Forest Resources to negotiate timber rights and there was no determination of timber rights by the Marovo Area Council. The original landowners from these tribes do not support the logging operation in their land."

At paragraph 6 of the same affidavit of Snyder Rini, he further states that he is the Paramount Chief of Marovo.

At paragraph 7, he states that the chiefly title descended from Bera down to him and therefore his line would have had the primary rights, rather than the Second defendant and his line, whom he says descended from Savo, the brother of Bera, but was not a chief.

There exist therefore at this stage of the proceedings triable issues as to ownership over Porepore Island. For instance, which tribe has the primary rights over Porepore Island, or whether they exercise equal but separate distinct rights over separate parts of the Island? Who are the chiefs of those tribes, or of both tribes, and or, who are entitled to be paid the royalty from the log proceeds from those two tribes? Are the persons listed in Exhibit "A" of the said affidavit of Milikada Silas, all the correct persons entitled to be paid the royalty from the log proceeds; if not, who are they? How was the rate of royalty calculated? What about payments of compensation? Who in that list were paid royalty, and who, compensation? If compensation, how was that calculated?

A number of affidavits too have been filed in which it has been deposed to that, certain persons included in the list in Exhibit "A" of the affidavit of Milikada Silas filed on the 12th of April 1995 did not receive the $4,000 alleged to be paid in September of 1994, and also that a number of them should not have been paid royalty because they were the brothers and sisters of the Defendant (see affidavit of Sabo Kioto filed on the 25/4/95, affidavit of Blackie Steven filed on the 26/4/95, and affidavit of Snyder Rini filed on the 26/4/95. The affidavit of Harry Loregi filed on the 24/4/95 also indicates that he did not receive any payment of $4,000, but this will be subject to cross-examination in view of what he has subsequently said to both Mr. Kama and Mr Radclyffe since).

On one hand, I am satisfied that royalty and compensation payments are reasonable and proper expenses to be paid. On the other hand, I am not satisfied that the persons listed in Exhibit "A" are all the persons entitled to receive the payment of royalty. It seems to me that this will be one of the main questions to be determined, if not in this Court, then by the courts that have jurisdiction to deal with questions of ownership of customary lands.

The only figure so far mentioned as pertaining to this head of expense is $76,000. Accordingly, I will direct that this amount be set aside for that head of expense but shall not be paid out of the trust fund until the uncertainties raised in this ruling have been satisfactorily addressed. What needs to be borne in mind as well is that if the Plaintiff wins his case at the end of the day, then those moneys may partly go towards payment of whatever damages that may be assessed and awarded.

The next head of expense sought to be approved as set out in paragraphs (4) and (7)(f) of the affidavit of Milikada Silas relates to the payment of A.E. Enterprises Limited, for its services in the sum of $2,627,084.77. This figure is based on the terms of the Logging Agreement referred to earlier in this judgment, between A.E. Enterprises Limited and Ofogia Association Limited. At page 3 under the sub-heading "CONSIDERATION", the rate agreed upon between the parties was "USD75.00 per cubic meter of round log skidded to the log pond".

In an earlier hearing before this Court on the 28th of September, 1994, it was requested by the Plaintiff that another logging company be engaged to carry out the extraction, and export of the logs already felled. This was refused by the Court and Mr. Eke’s Company was permitted instead to carry out the export. Unfortunately, no directions were given as to the rate of remuneration of Mr Eke’s Company for the part his Company would play in the extraction and export of the felled logs. Both parties did not raise this matter either before the Court. What took place is that, Mr Eke has proceeded with his operations and based his expenses on the terms of the Logging Agreement executed between his company and Ofogia Association Limited in July of 1994.

Snyder Rini deposed in his affidavit filed on the 26th of April, 1995, that the rate of USD75 per cubic metre used or relied on is too excessive. He bases this on the amounts that have been calculated as being due to Mr Eke’s Company, which he says comprised about 93% of the total sale proceeds. Unfortunately, there is no other evidence to show how that might have been excessive.

It is important to bear in mind that the rate of USD75 per cubic metre relied on had been voluntarily agreed upon between A.E. Enterprises Limited and Ofogia Association Ltd in July of 1994, well before these proceedings had been initiated. It therefore could not have been subjected to manipulation and it must have been considered to be a fair and reasonable rate at that time.

Further, it was a rate agreed upon on all logs skidded to the log pond. As shown in the "Certificate of Volume" attached as Exhibit "F" to the affidavit of Milikada Silas filed on the 12th of April, 1995, not all the logs skidded to the log pond were exported. A total of only 8,157.688 cubic metres were exported out of 10,399.753 cubic metres of round logs skidded to the log pond. Mr Eke’s rates however, would have been based on the total volume of 10,399.753 cubic metres. This meant that there was a certain volume of logs for which no payment would have been received. The work and expense nevertheless had been done and accordingly, it only seems reasonable for such a rate to be calculated on the way it had been agreed upon.

I am not satisfied therefore that the rate relied on is excessive in the circumstances.

However, before approval is granted, a new matter has been raised in the second affidavit of Milikada Silas filed on the 27/4/95, in which he deposed at paragraph 6 that it appears that the volume of logs recorded in the Certificate of Volume (Exhibit "F") certified to be correct by Mr Eke and Lazado Jesus, a representative of the Buyer, was wrong. He stated that he was shown a telex dated the 13th March, 1995 to Tradco Shipping (Exhibit "A" to the Second Affidavit of Milikada Silas) which indicated that more than 8157.688 cubic metres were loaded. As a result, he had the quantity of rejected timber checked by Kelvin Roy, a Forest Ranger employed in the Ministry of Forestry, Environment and Conservation. His findings have been compiled in a report dated the 20th of April, 1995 and attached to the same second affidavit of Milikada Silas and marked Exhibit "B". His findings showed that only 985.380 cubic metres were rejected, instead of 2,242.065 cubic metres claimed in the "Certificate of Volume" signed by Lazado Jesus and Mr Eke.

Mr Radclyffe now submits that in view of the discrepancy, only the sum of SBD2,378,166.00 should be released to A.E. Enterprises Limited.

The discrepancy shown above raises new issues, which at this stage have not yet been fully investigated and assessed. It is possible that a mistake may have been made somewhere, or something more serious.

The claim for expenses for A.E. Enterprises Limited, however, appears little affected by that discrepancy in that it is based on the total volume of logs skidded to the log pond, not the volume of logs exported. On that basis the total amount claimed of $2,627,084.77 should be approved.

The final expense claimed for approval is $10,000.00 for consultancy fees charged by FPS Business Consultancy. There is insufficient evidence to show in what way this is related to the extraction, transport and export of the logs. The mere fact that it is an expense of Ofogia Association Limited does not qualify it to be released at this stage. This claim is also denied.

The only claim therefore approved for payment is $2,627,084.77, and I so Order.

At least the sum of $76,000.00 is to be earmarked for royalty payments, however, that should not be released at this stage.

Costs in the cause.

A.R. PALMER
JUDGE